FX spot, derivative turnover dips by 52.9 per cent as equities shed 1.1%

Foreign exchange (FX) spot and derivatives markets turnover for the week ended April 5, 2024, was $918.15 million, representing a decline of 52.9 per cent ($1,030.53 million) from $1,948.68 million recorded on March 28, 2024.

According to data from FMDQ Securities Exchange, the week-on-week (WoW) decrease in the total turnover was driven by the 23.9 per cent ($284.83 million) and 98 per cent ($745.70 million) decreases in FX spot and FX derivatives turnover respectively.

It stated that the Week on Week (WoW) decrease in FX derivatives turnover was solely driven by the 98 per cent ($745.70 million) decrease in FX Forwards turnover, whilst there was a continued lack of activity in both the Exchange-Traded FX Futures and Cleared Naira-Settled Non-Deliverable Forwards (Cleared USD/NGN NDFs) markets.

In the FX spot market, the total value of transactions for the week ended April 5, 2024, also stood at $903.15 million, representing a decrease of 23.9 per cent ($284.83 million) from the value of transactions executed in the week ended March 28, 2024 ($1,187.98 million).

Also, within the period, the average Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rate was $/₦1,270.87, compared to $/₦1,367.01 recorded in the week ended March 28, 2024.

Meanwhile, the domestic equities market recorded its third consecutive weekly loss as the All-share index and market capitalisation depreciated by 1.1 per cent to close the week at 103,437.67 and N58.498 trillion, amid selling pressure across tier-1 banking stocks, FBNH (-14.2 per cent ), GTCO (-8.6 per cent), Accesscorp (-7.8 per cent), and Zenith Bank (-4.5 per cent) and MTN Nigeria (-2.2 per cent).

Similarly, all other indices finished lower except NGX consumer goods and NGX growth which appreciated by 0.94 per cent and 0.32 per cent respectively while the NGX ASeM and NGX Oil and Gas indices closed flat. Last week, the market opened for four trading days, as the Federal Government declared Monday as a public holiday to commemorate the Easter celebration.

The banking (-6.7 percent) index recorded the most substantial loss, followed by the insurance (-0.9 per cent) and industrial Goods (-0.3 per cent) indices. Conversely, the consumer goods (+0.9 per cent) index advanced, even as the Year-to-Date return settled at +38.3 per cent.

Analysts at Cordros Capital said: “We expect to see more of a choppy trading pattern in the week ahead as cautious trading dominates trading activities. In the short-term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and corporate actions.”

Vetiva Dealing and Brokerage said: “The banking sector lost 6.73 per cent last week, reducing its year-to-date (YTD) gain to 7.04 per cent, as investors weigh the immediate and long-term effects of the revised minimum capital requirement for the sector.

“While the sector is expected to benefit from the recapitalisation in the long-term, we might still see some bearish sentiment, as investors await full-year results. We still expect the banks to dictate market direction next week.”

On the activity chart, a turnover of 3.7 billion shares worth N57.9 billion was recorded in 40,726 deals by investors on the floor of the exchange, higher than a total of 1.8 billion units valued at N52 billion that was changed in 38,550 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 2.9 billion shares valued at N46.2 billion traded in 21,257 deals; thus contributing 78 per cent to the total equity turnover.

The services industry followed with 479.1 million shares worth N2.3 billion in 2,142 deals. The third place was the conglomerate industry, with a turnover of 123.6 million shares worth N1.6 billion in 2,849 deals.

Trading in the top three equities namely Abbey Mortgage Bank Plc, Tourist Company of Nigeria Plc and Zenith Bank Plc (measured by volume) accounted for 2.175 billion shares worth N20.7 billion in 2,594 deals, contributing 59.1 per cent to the total equity turnover.

A total of 28,431 units of Exchange Traded Products (ETPs) valued at N8.3 million were traded in 124 deals compared to a total of 20,189 units valued at N11.4 million transacted last week in 210 deals.

Also, 1.072 million units of bonds valued at N1.1 billion were traded in 32 deals compared to a total of 61,447 units valued at N60.2 million transacted last week in 27 deals.

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